Office of Single Family Program Development Single Family Housing Policy Handbook: FHA Connection 203k Calculator and Other System Enhancements April 28, 2016 Last Updated: 4/27/16 Presented by: Kevin Stevens, Director Home Mortgage Insurance Division MelissaLee, Contractor SalientCRGT
Agenda Call Welcome and Introduction of Speakers SF Handbook Systems Changes Overview Screen Changes and Enhanced Functionality 203k Calculator Appraisal Logging Insurance Application HUD Real Estate Owned (REO) Good Neighbor Next Door (GNND) Refinance Authorization and Refinance Credit Query Energy Efficient Homes (EEH) Stretch Ratios Escrow Closeout Certification Questions and Answers 2
Overview Monday, April 18, 2016, marked the official implementation of system modifications and enhancements to the FHA Connection (FHAC) and FHA Connection Business to Government (FHAC B2G) in conjunction with the March 14, 2016 update of FHA s Single Family Housing Policy Handbook 4000.1 (SF Handbook). http://portal.hud.gov/hudportal/hud?src=/program_offices/housing/sfh/handbook_4000-1 3
FHAC Screen Changes & Enhanced Functionality Bulk of the changes to FHAC are included in the following: 203k Calculator (new functionality) Appraisal Logging Insurance Application Remaining changes offer enhanced functionality regarding: HUD Real Estate Owned (REO) program Good Neighbor Next Door (GNND) program Refinance Authorization and Refinance Credit Query Energy Efficient Home (EEH) program Escrow Closeout Certification 4
203k CALCULATOR 5
203k Calculator: Purpose New tool provides ability to accurately calculate the maximum mortgage amount for a 203(k) purchase or refinance case. Also used to determine: Loan-to-value (LTV) factor for maximum mortgage eligibility; Calculates LTV for application of annual mortgage insurance premium; and Establishes details of 203(k) escrow account. 6
203k Calculator: Implementation Release Date: April 18, 2016 Optional for 203(k) case numbers assigned September 14, 2015 through October 30, 2016. If 203k Calculator is started for a case, it cannot be backed out and must be successfully processed for endorsement. Mandatory for 203(k) case numbers assigned on/after October 31, 2016 and must be completed before processing Insurance Application and endorsing the case for FHA mortgage insurance. Dates also applicable to FHAC B2G users. 7
203k Calculator: Versions Two versions of 203k Calculator are available: 203k Calculator (Public Version) Located on HUD.gov website at: https://entp.hud.gov/idapp/html/f17203k-look.cfm No FHAC sign on required; and Results print out for later reference but are not saved. 203k Calculator (FHAC Version) Sign on to FHAC required; FHA Case Number required; and When it is successfully processed, the data is saved and used to pre-fill certain Insurance Application fields. 8
203k Calculator: Authorizations 203k Calculator (Public Version) No authorization required. 203k Calculator (FHAC Version) FHA Connection Update authorization required to add or update case information. Query authorization required for view-only access. 9
203k Calculator: Background Information 203k Calculator is used for both Standard and Limited 203(k) cases that are either a purchase or refinance case. Standard 203(k): Requires use of a 203(k) consultant and is used for all structural remodeling/repairs and has a minimum repair cost of $5,000. Limited 203(k): Use of a 203(k) consultant is optional and used for minor remodeling/repairs not exceeding $35,000. Structural remodeling/repairs are not allowed with Limited 203(k). 10
203k Calculator: Background Information (cont.) Based on entered information, several fields are pre-filled by the system from: Case Number Assignment, Appraisal Logging, and/or FHA TOTAL Scorecard. Pre-filled case information must be updated on the page in which it was originally entered, such as Appraisal Logging. Then, reprocess 203k Calculator. For example, if 203k Calculator is processed before Appraisal Logging, or if specific Appraisal Logging information is updated after the calculator is processed, the 203k Calculator must be updated and reprocessed before Insurance Application can be accessed. 11
203k Calculator: Reference Documentation Additional assistance is available as follows: System Changes and Processing Instructions can be downloaded through the Materials button on the lower left corner of the screen. Help Links are available on each page and provide access to help for the FHA Connection function currently displayed. 12
Accessing 203k Calculator on FHAC Sign on to FHAC and select: Single Family FHA Single Family Origination Case Processing Click 203k Calculator New Click Send 372 7777777 Enter FHA case number 13
203k Calculator (FHAC Version): Case Information Basic case information is displayed and separated into three subsections. Preloaded fields are protected, so edits must be made where data was originally entered (such as Case Assignment) for the fields shown here. 14
203k Calculator (FHA Version): Case Information (cont.) Edits may be made to specific fields as needed. For a HUD REO purchase case, select the appropriate option from the drop-down list, otherwise the field cannot be edited. 15
203k Calculator (FHA Version): Case Information (cont.) Enter EEM and Solar/Wind fields Pre-filled if TOTAL Scorecard was previously processed; otherwise, enter amount. Enter N/A for borrower with nontraditional or nonsufficient credit. 16
203k Calculator (FHA Version): Case Information (cont.) If Appraisal Logging was not processed, the time period within which the property was acquired by the borrower must be selected (pictured below) applicable only to a refinance case. 17
203(k) Loan Appraisal Requirements Policy Reminder Subject To appraisals are required on all 203(k) loans. As-Is appraisals are required for: 203(k) purchase transactions - in cases of property flipping On a 203(k) Refinances where:» The sum of existing debt plus fees on the new loan is greater than the value on the Subject To appraisal.» The property was acquired less then 12 months prior to the case assignment date. An As-Is appraisal may be obtained on any transaction. 18
Step 1: Establishing Financeable Repair and Improvement Costs, Fees and Reserves The type of 203(k) case (Standard or Limited) determines what must be entered in this section. There are no differences in this section if the case is a purchase or refinance. Enter only whole numbers do not enter cents, commas, or dollar signs. Several system-calculated fields are included in this section. As amounts are entered, the fields are calculated and displayed in the respective fields. 19
Step 1A: Repair and Improvement Costs and Fees Total (sum of Step A1 thru Step A7) System-calculated field based on items A1 through A7 below. 20
Step 1A: Repair and Improvement Costs and Fees Total (sum of Step A1 thru Step A7) for Limited 203(k) Case As amounts are entered, the system calculates and displays the total amount in Step 1A: Repair and Improvement Costs and Fees Total (sum of Step A1 thru Step A7). Items A1, A4, A5, and A6 are applicable to a Limited 203(k) case. The other listed items in Step 1A are protected from data entry and do not pertain to a Limited 203(k) case. 21
Step 1A: Repair and Improvement Costs and Fees Total (sum of Step A1 thru Step A7) for Standard 203(k) Case Items A1 through A7 are all applicable to a Standard 203(k) case. If an amount is zero, you may leave the field blank or enter a zero. As amounts are entered, the system calculates and displays the total amount. 22
Step 1B: Financeable Contingency Reserves Step 1B: Financeable Contingency Reserves - See Handbook for requirements for Standard and Limited Note: If Appraisal Logging is completed prior to processing the 203k Calculator form, the minimum and maximum financeable contingency reserve requirements are validated using the amount entered in Step 1B, along with the age of the property entered for Appraisal Logging. 23
Step 1C: Financeable Mortgage Payments Reserves Step 1C: Financeable Mortgage Payments Reserves Optional for a Standard 203(k) case (max 6 months) Not applicable to a Limited 203(k) case 24
Step 1D: Financeable Mortgage Fees Total (sum of Step D1 and Step D2) Step 1D: Financeable Mortgage Fees Total If origination and/or discount fees are charged, they must be entered in D1 and D2. The sum of Steps D1 and D2 is system-calculated and displayed in 1D. Note: The mortgagee may finance a portion of the borrower-paid origination fee not to exceed the greater of $350, or 1.5 percent of the total of the of the sum of Steps 1A, 1B, and 1C. 25
Step 1E: Total Rehabilitation Cost (Step 1 total) (sum of Steps 1A, 1B, 1C and 1D) for Standard 203(k) Step 1E is system calculated and the sum of previous fields in this section. 26
Step 2: Establishing Value The Adjusted As-Is and After-Improved values for a property are determined in this section. Some field labels differ based on whether the case is a purchase or refinance, and other case characteristics. Enter only whole numbers do not enter cents, commas, or dollar signs. Several preloaded and system-calculated fields are included in this section. Preloaded fields are protected and any updates must be made where the case data was originally entered, such as Appraisal Logging. 27
Step 2: Establishing Value - Adjusted As-Is Value (Purchase case) If Appraisal Logging was processed, Step 2A. Purchase Price is system populated and the amount is protected; otherwise, enter the amount. 28
Step 2: Establishing Value Adjusted As-Is Value (Purchase case) (cont.) If an amount is entered in Step 2B. Inducements to Purchase, the Inducements to Purchase field for Insurance Application is pre-filled with that amount. Step 2C is a system-calculated field and subtracts the amount in Step 2B from Step 2A. 29
Step 2: Establishing Value - Adjusted As-Is Value (Purchase Case) (cont.) When an As-Is Appraisal is required, enter the estimated value in Step 2D while waiting for the appraiser s report. After logging the appraisal via Appraisal Logging, Step 2D is preloaded and becomes a protected field. Step 2E is a system-calculated field. 30
Step 2: Establishing Value - After-Improved Value (Purchase Case) (cont.) If Appraisal Logging was processed, Step 2F. Appraised Value (subject to repairs and improvements) is preloaded and the amount is protected; otherwise, enter the amount. The After-Improved Value field for Insurance Application is pre-filled with this amount. 31
Step 2: Establishing Value - Adjusted As-Is Value (Refinance Case) Fields A, B, and C are labeled differently for a refinance case; and, field D is not listed for a purchase case. 32
Step 2: Establishing Value - Adjusted As-Is Value - Step 2A (Refinance Case) (cont.) Enter the amount in Step 2A. 33
Step 2: Establishing Value - Adjusted As-Is Value - Step 2B (Refinance Case) (cont.) Step 2B is protected and populated with the amount from Step 1E. Total Rehabilitation Cost (Step 1 total) (sum of Steps 1A, 1B, 1C and 1D). 34
Step 2: Establishing Value - Adjusted As-Is Value - Step 2C (Refinance Case) (cont.) Enter the amount in this field. 35
Step 2: Establishing Value - Adjusted As-Is Value - Step 2D (Refinance Case) (cont.) Amount is system calculated, protected, and the sum of the previous three fields. 36
Step 2: Establishing Value - Adjusted As-Is Value - Steps 2E and 2F (Refinance Case) (cont.) Step 2E: If an as-is appraisal was entered via Appraisal Logging, the amount is preloaded and the field is protected. If an as-is appraisal has not been logged yet, enter the amount; otherwise leave blank. Step 2F: Amount is system calculated and protected. 37
Step 2: Establishing Value - Adjusted As-Is Value Step 2G (Refinance Case) (cont.) Enter estimated After-Improved value while waiting for the appraiser s report. After Appraisal Logging is processed, Step 2G is system populated and protected. The After-Improved Value field on Insurance Application is also pre-filled with this amount. 38
Step 3: Calculating Maximum Mortgage Some field labels in this section differ based on whether the case is a: Purchase not HUD Real Estate Owned (REO) Purchase REO not $100 Down Purchase REO $100 Down Refinance Majority of the fields in this section are system calculated and protected. 39
Step 3: Calculating Maximum Mortgage (Purchase - Not a HUD REO) For a purchase case that is NOT an REO: All fields in Step 3 are protected and calculated/populated by the system. Step 3C. Lead-Based Paint Credit Adjustment is only applicable to REO purchases and is otherwise protected from data entry. 40
Step 3: Calculating Maximum Mortgage (Purchase -REO Not $100 Down) For a purchase case - REO not $100 Down case: All fields in Step 3 are protected and calculated/populated by the system, except for Step 3C. Lead-Based Paint Credit Adjustment, which is entered by the user if applicable. The field label for Step 3D differs based on whether the case is participating in the $100 Down Sales Incentive HUD program. 41
Step 3: Calculating Maximum Mortgage (Purchase - REO $100 Down) For a purchase case - REO $100 Down case: All fields in Step 3 are protected and calculated/populated by the system, except for Step 3C. Lead-Based Paint Credit Adjustment, which is entered by the user, if applicable. The field label for Step 3D differs based on whether the case is participating in the $100 Down Sales Incentive HUD program. 42
Step 3: Calculating Maximum Mortgage (Refinance Case) For a refinance case: All fields in Step 3 are protected and calculated/populated by the system. Field labels for Steps 3A thru 3D and 3F of this section also differ for a refinance case. 43
Step 4: Additions to Base Mortgage Amount The majority of the fields in this section are: System calculated and protected; Applicable to: An Energy Efficient Mortgage (EEM) and/or Solar/Wind case; and A purchase or refinance case. 44
Step 4: Additions to Base Mortgage Amount Policy Reminder Solar/Wind refers to use of the Solar and Wind Technologies product in Handbook 4000.1 II.A.8.m. This product allows for the Nationwide Mortgage Limit to be exceeded. EEM refers to the use of the Energy Efficient Mortgage product in Handbook 4000.1 II.A.8.c. This product allows for underwriting the mortgage excluding the amount related to the EEM improvement costs (excluded from DTI). The 203k program by itself also permits the financing of Solar/Wind or other energy efficient improvements. The costs for EEM and/or Solar/Wind improvements must be entered in Step 1 or Step 4, but not both. 45
Step 4: Additions to Base Mortgage Amount (Purchase Case) For a purchase or refinance case: All fields in Step 4 are system calculated and protected except for Steps 4A and 4C, for which data must be entered if Yes was selected for EEM and/or Solar/Wind in the Case Information section. Step 4G is calculated upon successfully processing the completed form and is displayed on the 203k Calculator Results page. 46
Step 4: Additions to Base Mortgage Amount Refinance Case For a purchase or refinance case: All fields in Step 4 are system calculated and protected except for Steps 4A and 4C, for which data must be entered if Yes was selected for EEM and/or Solar/Wind in the Case Information section. Step 4G is calculated upon successfully processing the completed form and is displayed on the 203k Calculator Results page. 47
Step 5: Calculating LTV for Application of Annual MIP Step 5A is protected and displays the system-calculated annual mortgage insurance premium (MIP) loan-to-value (LTV) ratio after the completed 203k Calculator form is successfully processed (pictured below for a Refinance case). 48
Step 6: Establishing the Rehabilitation Escrow Amount View-only fields that are pre-filled by the system. 49
Step 6: Establishing the Rehabilitation Escrow Amount (cont.) 6D applies only to HUD REO purchase cases 6F is the system-calculated sum of all applicable amounts entered in items 6F. 1 thru 7 50
Step 6: Establishing the Rehabilitation Escrow Amount - Limited 203(k) Not applicable to a Limited 203(k) case 51
Processing 203k Calculator and Viewing Results Click to process the completed 203k Calculator form. 203k Calculator Results page is displayed if processing is successful. 52
Processing 203k Calculator and Viewing Results (cont.) On the 203k Calculator Results page, the system-calculated values are provided for Steps 4G (Final Base Mortgage Amount) and 5A (MIP LTV) (pictured below for a Purchase case). Fields calculated only upon processing 203k Calculator 53
203k Calculator Updates Updates may be made to case information entered on 203k Calculator until the case is endorsed. Changes to Appraisal Logging will require users to re-run 203k Calculator. Once endorsed, the page becomes protected and no changes are permitted unless the Mortgage Insurance Certificate (MIC) is cancelled by authorized Homeownership Center (HOC) personnel. 54
Other Functions Menu and 203k Calculator Access to other related functions for the same case is available from the 203k Calculator and 203k Calculator Results page using Links available from drop-down list to other FHAC functions for the same case A link to 203k Calculator is also available using from other relevant pages, such as Appraisal Logging, for the same 203(k) case. Use link to display the 203k Calculator page for the displayed case 55
203k Calculator Public Version Available to the public on the HUD.gov website at: https://entp.hud.gov/idapp/html/f17203k-look.cfm Use to develop scenarios for 203(k) loans prior to issuing a case number. No sign on or FHA Case Number is required. Enter basic case information, then the page functions like the FHAC version of 203k Calculator. Results can be viewed/printed but not saved. 56
203k Calculator Public Version (cont.) Click link to access help information for this page Enter basic case information in the three subsections Click Send 57
203k Calculator Public Version (cont.) If processing of the initial page is successful, the 203k Calculator page appears with the appropriate calculator worksheet (based on entered case information). Fields are not pre-filled from other case sources, such as Case Number Assignment or Appraisal Logging. Enter case information similar to 203k Calculator (FHAC Version). Mortgage limits for property not provided but are available at: FHAC: https://entp.hud.gov/idapp/protect/hicostlook.cfm HUD.GOV: https://entp.hud.gov/idapp/html/hicostlook.cfm Process page when all information is entered and if no errors, 203k Calculator Results page appears. 58
203k Calculator Public Version (cont.) Edits may be made to entered case information except: 203k Type, Purchase/Refinance, Condominium, and Secondary Residence. Do not use your browser s Back button. Use Repaint Form link to return to the case input page, enter edits, and process page again. Click to return to the previous page and enter any necessary edits as needed. 59
203k Calculator Topics Discussed ü Implementation dates ü Authorizations ü Reference materials ü Public and FHAC 203k Calculator versions ü Walkthrough of 203k Calculator 60
APPRAISAL LOGGING CHANGES 61
Appraisal Logging:Changes that Affect 203k Calculator 203k Calculator information must be updated if the following Appraisal Logging information is changed: Contract Price; Appraised Value; Second appraisal added; and/or Prior sale information for a refinance case (property was acquired within the last 12 months or prior sale/transfer as a result of family gift or inheritance). Insurance Application cannot be accessed until 203k Calculator and Appraisal Logging have the same updated information. 62
Appraisal Logging: Appraisal Type Field Added The Appraisal Type field was added to the Reconciliation Fields section of Appraisal Logging. New 63
Appraisal Logging: Appraisal Type Field Added (cont.) The two options on the drop-down list of the Appraisal Type field are: As-Is: Estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Subject to: Appraised value of the property subject to: Completion; Repairs and improvements; and/or Plans and specifications. 64
Appraisal Logging: Appraisal Type Field Added (cont.) Appraisal Logging Rules for 203(k) Cases Only The Appraisal Type is required for all 203(k) cases processed on the FHA Connection, regardless of the Case Number Assignment date. On a 203(k) case only, the first appraisal logged must be a Subject to Appraisal Type. If a second appraisal is required, it must be an As-Is Appraisal Type. Appraisals submitted via the Electronic Appraisal Delivery (EAD) portal must be submitted in this order: Appraisal 1: Subject to appraisal; and Appraisal 2: As-Is appraisal. 65
Appraisal Logging: Appraisal Type Field Added (cont.) Rules for 203(k) Cases via B2G For 203(k) cases processed via B2G, entry of the Appraisal Type depends on the Case Number Assignment date as follows: Before September 14, 2015: Optional; On or after September 14, 2015: If the Appraisal Type is not provided, it defaults to Subject to for the first appraisal and As- Is for the second appraisal; and On or after October 31, 2016: Required. 66
Appraisal Logging: Appraisal Type Field Added (cont.) Rules for Non-203(k) Cases The Appraisal Type can be either Subject to or As-Is for the first and/or second appraisal. Entry of the Appraisal Type is required for non-203(k) cases processed on the FHA Connection with a Case Number Assignment date of April 18, 2016 or later. Entry of the Appraisal Type is optional for non-203(k) cases with a Case Number Assignment date prior to April 18, 2016. 67
Appraisal Logging: Appraisal Type Field Added (cont.) Rules for Non-203(k) Cases via B2G For non-203(k) cases processed via B2G, entry of the Appraisal Type depends on the Case Number Assignment date as follows: On or after October 31, 2016: Required Prior to October 31, 2016: Optional 68
Appraisal Logging: Second Appraisal Reason for 203(k) The Second Appraisal Reason field for Appraisal Logging was modified to include 203(k) As-Is Appraisal as an option. This option is used for a 203(k) case that requires an As-Is appraisal, in addition to the initial Subject to appraisal. New 69
Appraisal Logging Topics Discussed ü Appraisal Type field added ü Reason for a second appraisal added for a 203(k) case 70
INSURANCE APPLICATION CHANGES 71
Insurance Application: 203(k) Changes Insurance Application cannot be accessed if: 203k Calculator does not agree with Appraisal Logging. Minimum Decision Credit Score for TOTAL Scorecard does not agree with the Minimum Decision Credit Score for 203k Calculator. They fall in different ranges or fall below 500. 203k Calculator is required for the case but not completed (only applicable to FHA case numbers assigned on/after October 31, 2016). 72
Insurance Application: 203(k) Changes (cont.) Pre-filled Fields from 203k Calculator If 203k Calculator was previously processed, the following Insurance Application fields are pre-filled from the calculator and protected: After-Improved Value * 203k Calculated Value * EEM Improvement Amount Energy Efficient Mortgage Escrow Amount Inducements to Purchase MIP LTV * Sales Price Solar/Wind Solar/Wind Amount $100 REO Down Payment Program * New pre-filled fields included with this release 73
Insurance Application: 203(k) Changes (cont.) Updating Pre-filled Fields from 203k Calculator Use 203k Calculator to update the pre-filled Insurance Application fields, except for Sales Price and After-Improved Value. Use Appraisal Logging to update the Sales Price and After- Improved value fields. For an electronic appraisal, update the appraisal report then upload it to the Electronic Appraisal Delivery (EAD) portal. Use Appraisal Logging to review and confirm the changes. Reprocess 203k Calculator with the updated information from Appraisal Logging. 74
Insurance Application: 203(k) Changes (cont.) Worksheet Information Section After Improved Value field rather than the Appraised Value appears in the Worksheet Information section of Insurance Application for 203(k) cases for which 203k Calculator was completed. It is protected and displays the pre-filled subject to appraisal value from Appraisal Logging. New 75
Insurance Application: 203(k) Changes (cont.) Mortgage Information Section Loan-to-value (%): Case LTV (mortgage amount without MIP divided by the 203k Calculated Value). 203k Calculated Value: New field for 203(k) cases only, systemcalculated field based on values from the 203k Calculator. It is used as the denominator when calculating case LTV based on values from 203k Calculator. MIP LTV: System-calculated LTV used to determine the Annual MIP for a 203(k) for forward cases assigned on or after April 18, 2016. This new field is pre-filled from 203k Calculator for 203(k) cases, if 203k Calculator was processed, and cannot be greater than the amount calculated by Insurance Application or an error message is returned. 76
Insurance Application: 203(k) Changes (cont.) Mortgage Information Section New 203(k) Fields New field corresponding to Step 3D on the 203k Calculator. This is the denominator for calculating Case LTV vs. MIP LTV, which uses After-Improved Value in Step 5. New field corresponding to Step 5 on the 203k Calculator. 77
Insurance Application: Building on Own Land Modifications were made to the Building on Own Land field in the General Information section. For this field, if you select: Yes, then Construction Code must be: Proposed Construction, Under Construction, or New Construction (Less than 1 Year) No, then Construction Code must be: Existing Construction, or Substantial Rehabilitation. 78
Insurance Application: Energy Efficient Home (EEH) Updates to the Worksheet Information section related to Energy Efficient Mortgages (EEM) and Energy Efficient Home (EEH) stretch ratios. Must be completed when case is manually underwritten for EEH and the borrower s income ratios are stretched by two percentage points above the standard home limits. Updated field name Two new EEH fields 79
Insurance Application: Energy Efficient Home (EEH) (cont.) Home Energy Score For cases with a Construction Code of Existing Construction or Substantial Rehabilitation, enter the home s energy performance score (between 0 10). Leave blank for cases with a Construction Code of Proposed Construction, Under Construction, or New (Less than 1 Year). These homes automatically qualify for stretch ratios if manually underwritten, but must be in compliance with HUD s other qualifying criteria regarding energy code standards. See the HUD Handbook 4000.1 for additional information regarding stretch ratio qualifications. 80
Insurance Application: Energy Efficient Home (EEH) (cont.) Manual Underwrite Stretch Ratios (EEH) Select Yes if manually underwritten using stretch ratios, Select No if the case is not manually underwritten and stretch ratios are not being used for the EEH; the Home Energy Score field is left blank. Energy Efficient Mortgage (EEM) Replaces the Energy Efficient Mortgage Type classification field. Select Yes or No to specify whether the case is an EEM and energy efficient improvements are being factored into the loan. If Yes is selected, the EEM Improvement Amount must be greater than $0 and is subject to limits in Handbook 4000.1. 81
Insurance Application Topics Discussed ü Changes for 203k Calculator (pre-filled fields from 203k Calculator and new/renamed fields) ü Changes for the Energy Efficient Home (EEH) program ü Changes for Building on Own Land 82
HUD REO CASE CHANGES 83
HUD REO Changes: Case Number Assignment Processing Type Must Be Real Estate Owned with Appraisal For HUD REO cases assigned an FHA case number on or after April 18, 2016, the Processing Type must be Real Estate Owned w/appraisal. Real Estate Owned w/o Appraisal is no longer an available option. 84
HUD REO Changes: Insurance Application HUD REO Repair Amount Field Added New optional field applicable to HUD REO cases. Records amount of repair funds held in escrow to meet HUD s minimum property requirements. Cannot include escrow funds for installation of solar/wind/ weatherization systems. Escrow must be Yes if entered in the HUD REO Repair Amount field (max $5,500). 85
HUD REO Changes: Insurance Application (cont.) Maximum LTV Ratios For HUD REO case numbers assigned on or after April 18, 2016, the maximum loan-to-value (LTV) ratios are: HUD REO investment property: LTV 75% (one to four units) HUD REO: LTV 96.5% HUD REO $100 Down: No LTV ratio (can be $100 less the Adjusted Value plus repairs) 86
GOOD NEIGHBOR NEXT DOOR (GNND) CHANGES 87
Good Neighbor Next Door Changes: Secondary Financing If Federal Government GNND is selected as the Source of Funds, enter the amount of the discount by which the sales price was reduced in the Amount 1 field. Do not enter any other information. New option added to identify Good Neighbor Next Door (GNND) as a Source of Funds. 88
Good Neighbor Next Door Changes: Insurance Application CLTV Total (%) field (located in the Mortgage Information section of Insurance Application) provides the combined loan-to-value ratio if the borrower has more than one loan (i.e., secondary financing). The new HUD Good Neighbor Next Door (GNND) secondary financing source is not included in the CLTV Subject to Limit (%) for Insurance Application (Mortgage Information section) since it is a government entity. 89
ORIGINAL ANNUAL MIP FACTOR (%) ADDED 90
Original Annual MIP Factor (%) Original Annual MIP Factor (%) field was added to three FHA Connection pages: Refinance Authorization Results Refinance Credit Query Results Case Number Assignment Results Current MIP factor of loan being refinanced. Displayed for use in FHA Streamline Net Tangible Benefit Test. 91
Original Annual MIP Factor (%): Refinance Authorization New 92
ESCROW CLOSEOUT CHANGES 93
Escrow Closeout: Fields Added for 203(k) Cases 203k Consultant ID Identifies 203(k) consultant assigned to a 203(k) case; Appears only for 203(k) cases; Is protected no edits can be made; and For a: Standard 203(k) case: The consultant s FHA ID and name appears. Limited 203(k) case: Displays 203KS unless a 203(k) consultant was used then the FHA ID and name appears. 94
Escrow Closeout: Fields Added for 203(k) Cases (cont.) Replacement 203k Consultant ID Records 203(k) consultant information if a new consultant is needed for the case. For a: Standard 203(k): You must enter consultant ID. Limited 203(k): You may enter 203KS, leave blank, or enter consultant ID (if consultant is used). Cannot be the same as the current 203k Consultant ID. Must currently be active on 203(k) Consultant Roster, or have been active on roster at time of endorsement. Field is displayed only for a 203(k) case. 95
Escrow Closeout: Fields Added for 203(k) Cases (cont.) Replacement 203k Consultant Date Records the date a replacement 203(k) consultant was assigned to the project. Field is displayed only for 203(k) cases. New fields (displayed only for 203(k) cases) Protected If date is entered, the Replacement 203k Consultant ID is required. 96
Escrow Closeout: Closeout Type Changes HUD REO Option Added This new option is for repair work on a former HUD REO property. New option 97
Escrow Closeout: Closeout Type Changes (cont.) Energy Efficient Improvements and Closeout Types If Solar/Wind is the Closeout Type, then you must select Solar PV/Hot Water and/or Wind Energy System as an energy efficient improvement. Previously was N/A 98
Escrow Closeout: Changes for a Project Extension Borrower may request an extension for a project that is not completed by the established finish date. Extension can be for any case type. Mortgage must be current. Lender grants extensions at its own discretion, and Documentation must be retained by the lender. New fields include: Approved for Extension Yes/No Revised Expected Completion Date Extension Justification Reason 99
Escrow Closeout: Changes for a Project Extension (cont.) New fields for a project extension (applicable to all case types) 100
Escrow Closeout: Changes for a Project Extension (cont.) Lender selects Yes to approve extension or No to deny extension. If Approved: Enter the month/year of the revised completion date. Must be later than the original completion date, but no more than six months past. If Denied: Revised Expected Date must be left blank. 101
Escrow Closeout: Changes for a Project Extension (cont.) If an extension is approved, then a reason for the extension must be selected from the drop-down list. If you select Other, you must enter an explanation in the text box. If an extension is not approved, you must select Other as the justification reason and enter an explanation in the text box. 102
Escrow Closeout: Health and Safety Issue Changes New fields added for health and safety issues. Specify whether health/safety hazards that violate HUD s Minimum Property Requirements were resolved by selecting Yes or No. If No is selected, enter the unresolved issues in the text box. 103
Escrow Closeout: Certification Changes New certification section for a 203(k) case. The list of required documents differs between a 203(k) and non-203(k) case. However, the certification section is completed the same way for all case types. 104
Escrow Closeout: Certification Changes (cont.) New certification section for a non-203(k) case. For a non-203(k) case, the required documents differ between programs. 105
Escrow Closeout: Certification Changes (cont.) Select Yes if: work was completed, escrow account was closed, and any remaining funds were applied to the principal. If Yes is selected above, this section of the certification applies to the 203(k) case. 106
Escrow Closeout: Certification Changes (cont.) Select No if: work is incomplete, escrow account was closed, and remaining funds were applied to the principal. If No is selected above, this section of the certification applies to the case. 107
Escrow Closeout: Certification Changes (cont.) If the work is incomplete, select a reason from the drop-down list. If Other is selected as the reason, enter an explanation in the text box. Note: Box is limited to 500 characters. If more detail is needed, summarize and indicate complete write-up is retained in file. 108
Escrow Closeout: Certification Changes (cont.) Once the Escrow Closeout certification is processed (whether or not the work was completed) the information cannot be updated by the lender. Only authorized HOC staff can remove the existing Escrow Closeout information for the lender to be able to make updates. 109
QUESTIONS AND ANSWERS
THANK YOU!